Construction costs are currently skyrocketing

What is being speculated on when the financing starts at very favorable conditions <1% and the fixed rate is only secured for 10 years? That interest rates will be even lower?
I could understand it if the remaining debt were marginal, but the 300k at possibly 4-5% or more could become a never-ending story.

We completed the financing about 1 year ago. Back then, 4-5% interest rates were not on any expert’s radar. The rates for 15 years were at 1.44%. At that time, it was a leap that was too high for us. Now we would decide differently. As always, one year later you can make good remarks, almost one year ago everyone was looking into a crystal ball.

Furthermore, interest rates would have to rise well above 5% for us to have 4-5% apply. Or the values of the plots/buildings would have to fall significantly. With a 300,000 € financing in 9 years, we would be well under 50% loan-to-value.

We completed the financing about a year ago. At that time, 4-5% interest rates were not on any expert's radar. The rates for 15 years were at 1.44%. Back then, it was a jump that was too high for us. Now we would decide differently. As always, one year later you can make good remarks, but almost a year ago, everyone was looking into the crystal ball.

Well, some already secured for 20 years last year, even though the unanimous opinion in this forum was that it was nonsense. Today I am glad about it. Although the difference was not that high for us either; we got 1.1% for 20 years.

We completed the financing about a year ago. At that time, no expert had 4-5% interest rates on their radar. The interest rates for 15 years were at 1.44%. Back then, that was a jump that was too high for us. Now we would decide differently. As always, one year later you can make good remarks; almost one year ago everyone was looking into a crystal ball.

Exactly. That can have various reasons. An interest rate about 0.5% higher results over the years in either significantly higher costs or lower repayment. The refinancing can be offset against higher interest rates by the significantly lower remaining debt. Risk and opportunity ratio.

Well, some people already signed up for 20 years last year, even though the unanimous opinion in this forum was that it was nonsense. Today I'm glad about it. Although with us, the difference wasn't that high either, we got 1.1% for 20 years.

That always depends on the financing. For us, it was important that we find a bank willing to take the second lien. That wasn't easy because others demanded much higher interest rates. At that time, the MBS didn't offer 20 years.

It’s just annoying when you need more than a wheelbarrow full, but less than a whole train...

But you can just pick that up at the next gravel pit, right? Either the wheel loader dumps something into the trailer or you shovel yourself because otherwise it’s definitely overloaded.

I’m curious about that. I hope that in 9 years (when our 10-year financing at 0.96% ends; the remaining debt will be around €300,000) the interest rates will have normalized again. Although the question is, what is a normal interest rate? :cool:

The interest rate is only half the story; it also depends on how much the money is still worth then. I only have 10 years too and assumed back then (about three quarters of a year ago...) that interest rates would stay low longer and a follow-up financing at 2% would not be unrealistic. Currently, it doesn’t look like it, but the next crisis still has a few years to come. With a longer fixed interest period, I’d be even at about 3%, meaning just above that is a loss-making deal but not a big deal. And if interest rates remain permanently higher, that will also be inflation. Then the good 200k remaining debt is not so bad anymore and can be paid off quickly with an installment increase.

I hope that in 9 years (then our 10-year financing at 0.96% will end; the remaining debt will be around €300,000) the interest rates will normalize again.

After moving in, try to save €10-20k annually (not a new car every 3 years), this greatly facilitates the follow-up financing.